Fact-Check: As MWD’s tunnels tab continues to increase, water deliveries could decrease

Feb. 13, 2018 – Yesterday, Metropolitan Water District of Southern California (MWD) General Manager Jeff Kightlinger reported to MWD Board Members on the Water Planning and Stewardship Committee that the new phased-in tunnels project would require a $5.1 billion contribution and that MWD would receive the same amount of water with operation of the first 6,000 cfs tunnel, as they would with operation of two 4,500 cfs tunnels.

General Manager Kightlinger has also indicated that the new proposed 6,000 cfs tunnel project has only gone through 30 percent of the conceptual engineering process. Consequently, construction and operational criteria cannot be verified fully for an independent financial analysis—without a completed, transparent operational analysis, it is quite possible that MWD could receive less water than they are stating publicly.

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Last fall, MWD of Southern California’s Board of Directors voted to make a $4.3 billion contribution, with repayment based solely on water sales by member agencies controlling how much WaterFix water they would choose to purchase, for a total 25 percent share of a 9,000 cfs project—not a $5.1 billion contribution for a 6,000 cfs project. General Manager Kightlinger and MWD staff members also made promises to several member agencies and municipalities that they would not have to pay for WaterFix expenditures if they chose not to receive water from the tunnels.

Yet, MWD of Southern California shows in its 2018-19 and 2019-2020 biennial budget that expenditures for WaterFix will also be spread among all its member agencies through: 1) System Access Rate Charges, which MWD defines as a means for recovering capital, operating and maintenance costs associated with [water] transportation facilities, including conveyance via the State Water Project and Colorado River aqueducts; and 2) Readiness to Serve Charges – fixed revenue charges based on averages of prior water sales. PDF Page 263 of the MWD budget breaks down these budget ratios as follows:
In FY 2019/20, consistent with the treatment of SWP Conveyance & Aqueduct costs, 54 percent of California WaterFix costs are allocated to Fixed Commodity, which is recovered through the System Access Rate, and 49 percent of costs are allocated to Fixed Demand and Fixed Standby, which is recovered through the Readiness-to-Serve Charge.

In addition, PDF Page 4 of the MWD biennial budget states that MWD will seek to maintain the ad valorem tax rate at the current level—despite State Water Project debt repayment nearing its end—in order to pay for growing State Water Contract expenses. Presently, additional expenses for the State Water Contract would be for the development of California WaterFix and maintenance of existing State Water Project facilities.

Barbara Barrigan-Parrilla, Executive Director of Restore the Delta noted,
“Currently, MWD’s contribution will increase by nearly $1 billion for a total of $5.1 billion, even though no additional permits have been secured for the project, a revised environmental impact report is underway, and conceptual design for a phased-in project with a larger initial tunnel is nowhere near complete.

“Depending on operations, the first 6,000 cfs tunnel could very well net MWD even less water than what was modeled with the original twin tunnels project. In other words, the overall expenditure is increasing as the MWD of Southern California Board of Directors continues to move forward with WaterFix, yet no one knows what the water yield will be from this new phased-in project.

“Even more disturbing are the huge discrepancies between what Metropolitan Water District promised member agencies, Southern California municipalities, and protesting Southern California ratepayers in 2017 and the real impact to future water rates. MWD is seeking to spread California WaterFix costs across all its revenue streams with contributions from all its member agencies, including those agencies which have no need for water from WaterFix because they rely on locally sourced water. Plus, as drought conditions become more and more permanent, revenues from water sales will continue to fall, foreshadowing that WaterFix expenditures will have to be paid with fixed revenue sources, like Ad Valorem taxes, by Southern California property taxpayers.

“The proposed project is nowhere near ready to break ground; bond funds have not been secured; and yet MWD is already breaking faith with its ratepayers. MWD continues to make up what CA WaterFix is as they go along, and are wreaking havoc through their outsized influence on the Department of Water Resources at the State Water Resources Control Board permit hearings for the tunnels. The residents of Southern California—who will end up paying the majority of the bill for the phased-in project—have a right to read, evaluate, and respond to DWR’s revised environmental impact report before consenting to rate increases caused by MWD’s cavalier planning and management.”

www.RestoreTheDelta.org